Borrowing to buy land

[Prospector]

If purchasing vacant land as an investment then only buy quality blocks.

Since there is only capital gains to be make a profit then this is vital.

Don't buy the first block in a new 100 lot subdivision.

Buy one with ocean views or close to beach or close to transport or in a good suburb with limited vacant land or other attributes (position, position, position!). Even if you have to pay a little extra - pay it!

Buy a lot that can be subdivided or will take unit development.

Have to agree with all of that! Purchased a waterfront block in Hindmarsh Island, SA, just before the Bridge was completed - one of the last 10 blocks of about 70 available. Has increased 150% in price in six years whereas street blocks haven't. It is in our Super Fund so wont be sold until we turn at least 55 years and drawing down.

Have just finalised the contract on a River Front apartment at Newport Quays Port Adelaide - one of the last few apartments available in Stage 1 and the view cannot be built out - it also has a Marina Berth which will probably increase in value faster than the apartment. This will be rented out for five years (not due for completion until Sept 07) for when we downsize.
Again, we paid more for the view and the berth than other apartments.

 

[tech/a]

Prospector.

I had a look at these myself.

My final feeling was that it was Multiplex making the $$s and was years ahead of its time for spec buying.So I didnt part with the $1.2 they were asking at the time.

Invested in land for developement in southern beaches.My veiw was there was more to be gained by my own developement than that of Multiplex.

Id be interested to know if people bought on spec then and now have on market for a quick return.Even this approach seemed risky as those on water front seemed full value with little upside in the forseeable future (5 yrs).

Still if you bought it for your own "Downsizing" and lifestyle then the $ value is of little consequence.

 

[mit]

One thing about buying land then building is that you save on stamp duty compared with buy a house on a block.

MIT

 

[Prospector]

Didnt quite part with the $1.2 million - quite a bit less than that for the apartments. I think you must have looked at the Villas - they sold out in 12 hours. It would be interesting to see if they will be valued more than that come settlement next year.

Once the development is actually visible, I think the values will soar because people can actually see it. Unless of course a lot of the properties have been bought for total speculation and will be sold come September next year, when there may be a glut of them. That is exactly what happened with Hindmarsh Island, as soon as the bridge was finished, (about a month after we bought it) the value went up overnight!

But like you say, we have bought it to eventually live in it, so there is no great benefit CGT wise.

Property is such a funny thing though. A few years ago we bought a small shack on the lake at Clayton (near Goolwa) and paid just over $60,000 for a fully furnished (3 bedrooms) waterfrontage (lake) shack with a never to be built out 180 view of Lake Alexandrina. A total lifestyle decision and our accountant said we needed to remember it was about lifestyle and was not an investment decision because it would cost us money.

Hmm, seven years later that shack is now worth well over $220,000! Did a similar thing with our home - it was very run down (10 years of tenants) but classic tudor on a large block in an undiscovered suburb in Adelaide (although surrounded by the usual Eastern suburbs). We had to have it valued for the loan for the Investment at Port Adelaide. Lovely surprise that valuation, and while we had spent around $90k on upgrading, it has returned over $200K more than cost price plus renovations cost in just 3 years! Trouble is, it is huge and it will be that property and Clayton that we will sell and 'downsize' when we move to Port Adelaide.

We have always wanted to live on the waterfront and had also looked at Bribie Island, but the prices for the quality development soared before we could get in. And the infrastructure is a bit lacking. Then we thought we could buy the block at Hindmarsh Isl and build on that, but while the summers are lovely the Winters are cold (although the block faces the right direction for protection) but this development fits our bill nicely. The submarine contract and need for skilled engineers we hope will mean we will find tenants for the time before we want to move in!

Lsst week when I was there there were dolphins swimming near the development - cant get much better than that!

Never thought I would want to live at Ethelton though (a joke for people who know Adelaide)